Thailand’s Big Brother Drama

Nov. 8 (Bloomberg) -- “Welcome to the Republic of
Thaksin.” You won’t see these words displayed in the customs
hall when arriving in Thailand, but the Land of Smiles has
indeed morphed into the land of Thaksin Shinawatra.

That should be giving Southeast Asia’s second-biggest
economy plenty to frown about. Seven years after the former
prime minister was ousted in a coup, Thaksin’s long shadow
continues to dominate Thai politics. Since then, the country has
seen six prime ministers, the most recent one being Thaksin’s
baby sister, Yingluck Shinawatra.

Like many loving siblings, Yingluck looks out for her kin.
Recently she tried to ram a get-out-of-jail-free card for
Thaksin and other politicians through the parliament -- as big a
political blunder as Asia has seen in years. Markets plunged and
more than 32,000 people joined demonstrations in the capital and
17 other provinces. This week, Yingluck backed down and agreed
to scrap the bill for now.

But anyone who thinks that’s the end of Thailand’s Thaksin
nightmare is wrong. The proud and acerbic billionaire, Asia’s
answer to Italy’s Silvio Berlusconi, isn’t about to shelve his
obsession with returning home, reclaiming the portion of his
telecommunications fortune frozen by the state and succeeding
his sister. Many fear Yingluck is little more than a placeholder
for big bro.

Thaksin’s Ambitions

With his ambitions thwarted for now, the focus has turned
to how much money this setback will cost Thaksin. Thais should
be worrying instead about how much this political circus is
hurting their $366 billion economy. Every day that politicians
and policy makers in Bangkok spend obsessing over Thaksin’s
return is one that’s not being used to modernize the economy,
increase competiveness and avoid the “middle-income trap” that
befalls many developing nations and may soon ensnare Thailand.

The politics of personality aren’t confined to Thailand.
Asia is awash with larger-than-life populists bigger on charisma
and spin than concrete reforms: leaders like Shinzo Abe in
Japan, Xi Jinping in China and, in some ways, Benigno Aquino in
the Philippines. The same problem afflicts several figures who
have yet take the helm, including India’s Rahul Gandhi. All have
neglected tough policy work in hopes that a strong personality
will be enough to carry them through and bolster their approval
ratings.

But Thaksin raised the strategy to an art form, essentially
making an entire nation about him. His tenure from February 2001
to September 2006 saw nothing less than the wholesale
bastardization of Thai democracy. He neutered its institutions
and enriched his family members and cronies in ways that would
have made a Russian oligarch blush.

Like former Italian Prime Minister Berlusconi, Thaksin was
a powerful tycoon who leveraged his business success to become
leader. Thaksin, like Berlusconi, was later accused of bending
the government to his will and in alignment with his business
interests. He got away with it by literally bribing the rural
communities that formed his power base. His “Thaksinomics”
program of flooding the hinterlands with cheap loans was never
more than Tammany Hall-like doling out of cash for support. The
money did nothing to improve the economy’s fundamentals or
capacity for innovation.

It’s a strategy Yingluck copied early and often after
becoming prime minister in 2011. Take her disastrous rice-subsidy plan, which by the latest estimate has cost $19 billion
since October 2011 and over time has recorded losses equivalent
to 59 percent of that figure.

Distorted Markets

Thailand is now sitting on two years of export production,
which has distorted rice markets in the Mekong River region and
cost Thailand the title of world’s biggest rice exporter. What’s
depressing is that in that time Thailand could have, say, built
a new state-of-the-art airport. Instead Suvarnabhumi Airport,
opened the same month in 2006 in which Thaksin was ousted,
continues to struggle with capacity constraints that are
impeding the all-important tourism market.

Why champion such a debacle? The rice program is sure to
pay huge dividends for Yingluck, and by extension Thaksin, come
early 2014 when her government may call a snap poll. The hope
would be for Yingluck’s party to demonstrate enough of a mandate
to resurrect the amnesty bill. To do that, they will need the
farmers. Hence the linear focus on boosting rice prices.

It’s frustrating to think where Thailand might be today had
the nation not squandered the last seven years on all things
Thaksin. By overreaching so spectacularly with the amnesty bill,
Yingluck displayed a level of cluelessness that will further
hobble her ability to govern.

The bill might have gotten further if it had also applied
to people charged with lese-majeste, which mandates prison
sentences as long as 15 years for defaming or insulting the
king, queen, heir apparent or regent. Instead the bill would
have allowed Yingluck’s brother, army officers and former Prime
Minister Abhisit Vejjajiva, who faces murder charges for
authorizing soldiers to use weapons during unrest in 2010, to
walk free -- not average Thais. It left the pro-Thaksin Red
Shirts and opponents known as the Yellow Shirts wondering who,
or what, they had been fighting for.

It’s time that the Republic of Thaksin became less about
one man and more about the aspirations and needs of Thais.